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The British Virgin Islands’ financial sector powers more than $1.5tr of investment around the world, and supports 2.2 million jobs. More than 400,000 BVI business companies are currently active, which enable the British Virgin Islands to be the seventh largest source of foreign direct investment. Gary Hales from BVI Finance explains how the BVI business company is used today, and how the islands’ Beneficial Ownership Secure Search scheme with the UK’s HMRC are helping it set new standards for transparency and security.

Mrassociates: The BVI business company is over 30 years old; how is it used today?

Gary Hales: There’s a wide range of reasons why companies are set up in BVI. And a lot of it is to do with capital flow around the world. They’re holding companies for either real estate assets, for succession planning for families, things like joint ventures being set up. Companies are set up for investment, so if people are putting funds in together to then invest in a different country around the world, or a different initiative, then a BVI company is a great product to utilise, to enable them to do that.

And for listings as well. You know, a number of companies are set up in BVI with anticipation to list in London, in New York. Those are the reasons.

And if you look behind it, what’s happened over the 30 years… BVI’s really focused on maintaining its reputation as being very well regulated. Adhering to all the global standards, to make sure we’re really at the forefront of what we’re doing.

Mrassociates: Give me some examples of the way that BVI business companies are being used to facilitate economic growth worldwide.

Gary Hales: So I mean, on some of the examples that I’ve mentioned. A BVI company being used for investment purposes is a perfect example. You know, you could be Chinese investors looking to invest in an infrastructure project in Africa, for example. And you may not want to set up the company in Africa, you may not want to set it up in Asia. You’re looking for a jurisdiction that’s tax neutral: you’ll still pay your tax as a company, but you won’t end up being double taxed through having it in BVI.

You know, if you look at the $1.5tr that flows through BVI, the tax that’s generated for governments around the world is in excess of $15bn. So there’s some real benefits that way, in terms of what’s being produced from the activities that go on within BVI.

Mrassociates: Now the BVI business company model has been replicated around the world; how have you adapted and updated it over the decades, to make sure that it remains competitive and relevant?

Gary Hales: As you mentioned earlier, there are approximately 400,000 companies incorporated in BVI, which makes us one of the world’s largest players in that particular market. And we’re constantly ensuring we’re adhering to global best practice. Whatever the OECD has put out there, the World Bank etc, we make sure that we meet those requirements.

If you couple that with things like having English common law, having a stable, democratically elected government, those sorts of things all help create this environment that we’ve got in BVI, that enables us to keep growing and keep developing and be recognised as a globally reputable jurisdiction.

Mrassociates: And on that point, you’ve recently introduced a Beneficial Ownership Secure Search programme – tell me more about that.

Gary Hales: So that’s off the back of the agreement we signed with the UK Exchange of Notes in April 2016. And basically, within all those 400,000 companies, the ultimate beneficial owner of those companies are on that system. So that if HMRC are doing a tax investigation on a particular company, they can request through the appropriate authorities in BVI for information on that particular company.

It’s been built by BDO, in conjunction with Microsoft. And I guess the best way I’ve described it – not being a techie myself – is the analogy of an apartment building. So, a hacker would have to get into the building. And then if you consider, in the building there are hundreds of apartments. And each apartment is a corporate service provider. So not only would a hacker have to get into the building, they’d have to then get into every single apartment within that building to gain access to all that information. So, extremely difficult – nigh-on impossible. And the level of security alone, just to get into each one of those, is the equivalent of your online banking.

So it’s really a world-class, innovative system that we have developed.

Mrassociates: We’ve talked about what BVI’s achieving for the world’s economies, but what do you want to achieve for the islands themselves?

Gary Hales: We play a number of different roles. Obviously we’re promoting and marketing BVI financial services. And the end result of that is obviously: that generates income for the island, which benefits the population. And, you know, 60 percent of BVI government’s income is from financial services, which then goes to build the hospitals, the roads, the normal infrastructure development.

We’ve recently done this report with Capital Economics, which talks about the value that BVI adds to the world, and in the BVI there are 2,200 people who are directly employed in financial services. But if you look at all the knock-on effects of those who are driving taxis, working in restaurants, and shops etc: that actually takes another 3,000. So we’ve got 5,000-5,500 people directly or indirectly working in financial services in the BVI.

That supports 2.2 million jobs worldwide. So, for a population like that, it gives us a great deal of pride, in how we are contributing to the global economy.